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Marketing and Apple Essay Sample

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1. Introduction

1.1 Background

Apple Inc. (Apple) is a multinational company which is located in California and its main products include personal computers, media devices and portable digital music players and so on. The company’s operations span across nine product lines which include: iPhone and related products and services, iPad and related products and services, portables, iPod, desktops, other music related products and services, software, service and other net sales, and peripherals and other hardware. After Samsung and Nokia, Apple is the third largest mobile phone maker in the world.

1.2 Marketing audit

The marketing audit is considered as a tool to gather data and information to reveal the business activities of the firms (Chirla and Funar, 2010). The marketing audit is an important part of the marketing planning process. It is conducted both at the beginning of the process and at a series of points during the implementation of the plan. The marketing audit considers both internal and external influences on marketing planning, as well as a review of the plan itself.

2. Main findings

2.1 The environment analysis

A business does not operate in a vacuum. It has to act and react to what happens outside the factory and office walls. These factors that happen outside the business are known as external factors or influences. Randviir (2007) defined the external environment to those that relevant physical and social factors outside the boundaries of the organization or specific decision unit that are taken directly into consideration. These will affect the main internal functions of the business and possibly the objectives of the business and its strategies.

2.2 Macro environment – PESTEL framework of Apple Inc.

The PESTEL is referred to Political, Economic, Social, Technological, Environmental and Legal factor (Michael E.Porter, 2008). It is used by global and multinational companies to set the stage, to develop specific tactics and to mitigate the risks involved in executing their vision in unfamiliar environments.

2.2.1 Political factors

Political factors include tax policy, trade regulations, tariffs, environment law and labour law. Tax policy will influence the business strategy of Apple Inc. such as, tax in American is really high, thus Apple Inc. should conducted some strategies to reduce tax bills in American. The government of the United States always pays much attention to high-tech industry investment, supporting the development of high-tech enterprises, which is good for the Apple Inc. who can get policy support from the government.

2.2.2 Economic factors

The European is affected by sovereign debt crisis and the bank is also affected, the markets think that the European banking credit risks is more serious than Lehmann’s collapse. If there were no effective policy measures, the huge debt discharge pressure may bring new capital market impact. American debt problem is the potential risks that facing the market. All the three international credit rating agencies (Kahney, Leander, 2008) think American sovereignty credit rating negative, once the United States financial policy tightening appearing than expected, it will drag the U.S. economy growth and constitute a significant uncertainty to 2013 global economic operation. There was a big economic recession in 2012; Apple Inc. also was influenced by the economic recession. The worldwide economy situation can significantly influence the company’s performance and operations. Because the economic conditions will affect level of consumption, for example continuing increased in energy cost (e.g. fuel), labour cost, healthcare cost, consumer confidence, real estate and mortgage markets, access to credit and some other macroeconomic factors.

2.2.3 Social and cultural factors

Social customs, economic development, people’s habits, the education degree will affect people’s consumption habits. With the development of economic technology and the improvement of people’s life standard, people tend to listen to music on the Internet rather than buy a CD in the retail stores especially the young. Most of the customers of Apple In. are young people, business personnel and video lovers, it is very important for the company to adapt to the social and cultural factors of the market. Education could be an important social factor that has impact on a company’s growth. According to this, Apple has established a Partner in learning program to support schools and educators, and brings dollars for improving the skills of teachers and reading resources for students for the global workforce. The benefit of this strategy for Apple is to obtain better and innovated work force in the future.

2.2.4 Technological factors

The reason that the computers of Apple are loved by people is its ability to innovate in technology, exterior design and product quality that a lot of people cannot be achieved. Apple always has the courage to deny itself, and go beyond itself, and continues to introduce new products more stylish and more attractive. The iMac G4 look like table lamps, pure white designed iBook notebook, LCD integrated iMac G5, and more recently, CD-ROM drive size Mac Mini and chewing gum like the iPod shuffle, the launch of each product caused everyone great concern, even Apple’s critics are forced to admit that Apple has never been mediocre.

2.3 Micro environment –Porter’s five forces analysis

Porter’s ‘five forces’ is a good tool to analysis micro environment of an organization. Potter (1980) defined forces to promote competition, he thought that competition environment resulted from the interaction of five different works which are the Degree of Rivalry,the Threat of Entry,the Threat of Substitutes,Buyer Power and Supplier Power. Table1. Porter’s five forces analysis

|Threats of new entrants |Apple Inc. has strong brand reputation, advanced technology, high customer loyalty , it | | |also has good customer satisfaction, high sales volume, effective operation, so new | | |entrants have small threats to Apple Inc. | |Power of suppliers |The suppliers’ power is small compared with Apple Inc. which makes up over 25 percent of | | |its suppliers business .Compared with 27% of the profit margin of Apple, the Fox Conn Which| | |is the largest suppler is around 4%. Moreover, the competition among suppliers is very | | |fierce | |Industry rivalry |The main cell phone competitors are Android, MeeGo, WebOS and QNX. The market share of iOS | | |is decreased from 83.9% to 63.5% during 2010 to 2012 and it is predicted a reduction in | | |2015.

The most competitive system is Android. The market share of Android has increased | | |from only 14.2 in 2010 to 24.4% in 2012, almost twice as much as 2010, and will rise to | | |38.6% in the future. | |Threat of substitutes |The threat of substitutes is low for Apple Inc. First, Apple Inc. has a large range of | | |products. Second, the value of Apple’s interrelated products and services is found in the | | |synergy between its product lines | |Power of buyers |Customers have less bargain power for Apple’s products. Apple relates its products together| | |and ties them. For example, if customers choose iPhone 5, they have to use the specific | | |smaller shim card, iTunes and an Apple charger. Moreover, most Apple customers buy more | | |than 1 Apple product; this makes the high switching costs for customers. |

3. SWOT Analysis

SWOT analysis was also known as the trend analysis and was brought forward by Early in the 80 years of the 20th century who was a management professor at the University of San Francisco (Adams, J. 2005). SWOT is a more objective and accurate analysis to the research of the reality of a unit. SWOT represents four letters: the advantage (Strength), disadvantage (Weakness), Opportunities (Opportunity), Threat (Threat) .SWOT can be divided into two parts: The first part is the SW, mainly used to analyse the internal conditions; The second part is OT, mainly used to analyse the external conditions, with this method you can identify beneficial factors, as well as bad things to avoid, and find a solution, and clear the direction of future development. According to this analysis, the problem can be classified prioritize. SWOT is a good tool for strategic and marking analysis with a long history. Its advocates say, it can be used to measure the degree of “fit” between organizational strategy and its environment, and propose how to make the organization benefit from the advantages and opportunities and the shield away from weaknesses and threats (Adams, 2005).

3.1 Strengths

(a) Very high brand awareness and reputation, good product quality, stylish, high-end product image, and apple’s mark itself is a guarantee of quality which is printed on the products. Because Apple is in very strict control of the quality of its products from product design, process selection, procurement of raw materials to production assembly and test, even in the offices, it was said that Jobs once had asked a designer to design new appearance of the Mac computers which people cannot see a screw, and later a screw slightly exposed, then Jobs immediately took his dismissal (Kahney, Leander, 2008). In the eyes of loyal supporters of Apple, Apple is completely perfect. (b) Pay much attention to research and development. Apple attaches great importance to the research and development of advanced technologies, like other IT companies, it has a strong research institution, and the purpose is to have a place for itself in the future competition in the market.

Apple product’s design is not only first-class, but also often created a revolutionary change in a market, apple products once in the market often imitated by competitors. pulley on the iPod touch technology, competitors and consumers realized that, just jump out of the framework of the conventional thinking ,the existing technology around will be able to find a better method of operation, allowing users to be more efficient and more convenient. Sony and Apple are all the first-class enterprises in consumer electronics, but overall, Apple is stronger than Sony, from an aesthetic point of view, Apple has the best product design, fashion, unique, amazing. Apple’s superior design is often reflected in some of the details, for example, the most creative Apple notebook top cover always design a half Apple logo at boot time, as the screen fade behind the Apple logo are slowly lit up, to this point the details of the ingenious idea to consumers who buy computers at once attracted.

3.2 Weakness

Apple’s disadvantages are as obvious as its advantages (Rodrguez, M, 2010). (a)Apple’s market share is still very low. Apple Mac computers in the first quarter of this year, according to market research firm Gartner released a report in April 2008, have just accounted for only 6% of the US market. far less than its competitors, such as Dell and HP, this also means that about 94% of users still use Microsoft operating system. (b) Too focused on technology innovation rather than ultimately increasing profits of company. Technological innovation truly bring a lot of success to Apple, but also have a negative effect, too concerned on technical innovation, while placed achieving profits in the second place, it is easy to disregard the cost of the developing process. Many companies mistakenly think that as long as encourage the creation, they will be able to increase profits, The expert from Phase Boston Consulting Group James Andrews pointed out that, in fact, a true innovation ability of the company was not only to be able to put forward a good idea, develop a good product, and provide a good service but also more importantly, these ideas, products and services should be able to create enough cash to make up for the cost and return on shareholders( Berlin Leslie. 2005).

In fact, the business model innovation is more important than technological innovation, this is also why Apple’s technical innovation is far better than Dell, but Dell became of the PC market winners. Technological innovations certainly win appreciation, but what really allows the company to make money is the business model innovation. Experts point out that, even with strong technical innovation and effective sales strategies as well as competitive prices, if you cannot combine business model innovation; you are most likely not to be able to create r value for shareholders. Apple later should consider following this value-driven business model innovation.

3.3 Opportunities

(a) The consumer electronics market is very huge. The U.S. Consumer Electronics Association (CEA) revealed that International Consumer Electronics Showed that the revenue of the global consumer electronics products would increase by nearly 10 percentage reaching to 9000 billion in 2012 (Gary Shapiro,2008). This is a huge market, as long as the product is recognized by consumers, what companies will face is how to expand market share, and how to grow and develop along with the consumer electronics industry. (b) Apple will outsource manufacturing and reduce costs easily as many OEM companies emerged in Asia, especially in China, has developed into the world’s factory, at the same time, China’s rapid growth of the domestic market will also provide opportunities for the growth of Apple’s global sales.

3.4 Threats

(a) The economy declined in the USA, consumers’ confidence was frustrated. The subprime mortgage crisis will continue to spread to the real economy, Europe and the United States real estate slump, the world is lack of new economic growth point, the global economy will meet significant cooling. The dollar is still weak, the price of oil, food and other primary products are high. The worldwide problem of excess liquidity still exists which increasing the pressure of global inflation. Thus the major national policy focus will shift to control inflation; the tightening of macroeconomic policies will further inhibit economic growth. These will lead to further consumer spending scruples, and will have future impact on consumer confidence. (b) Face many powerful competitors. Because of Apple selling multiple product lines, such as notebook, MP3, mobile phone, which led Apple to have to face more competitors than other companies at the same time, For example, in the computer market, it has to compete with Dell, HP, Acer, In the MP3 market, there are Sony, Philips, innovation, Samsung and SanDisk, in the mobile phone market, there are Nokia, Samsung, Sony Ericsson and other rivals.

5. Conclusions and recommendations

Overall, the advantages and disadvantages that are faced by Apple are quite obvious, so it should take the strategy of combining growth and reversing type. On the one hand, to use the outsourcing and the competition of supplier to reduce costs, to compensate for the low efficiency of management and manufacturing. On the other hand, with its own technology, innovation, brand and marketing advantage to product high competitive products, and seize the rapid growth of consumer electronic products, to obtain the results of high-speed growth, at the same time, to expand its market share. First, to improve the innovative capacity of the market segments. According to their own conditions, competitors weaknesses and certain consumer groups, divided the market and targete to improve the innovation ability of products and services Second, to emphasis on products’ quality. A large number of quality problems, is not what the technical problem, but is not paid enough attention.

Lower prices, material that its quality is not guaranteed, no strict quality control in the production process, will not bring enough profits to a company . The act itself is a short-sighted. A good product, should be perfect and make the factory feels confidence after sale out. Once the repair rate is high, you have to raise the number of maintenance staffs, this will not only increase the cost, but also damage the reputation of the enterprise Third, to improve service levels. Products’ quality problem may be caused by improper use or the upgrade of the new formats. These issues will be around consumers to buy products or not, so be sure to improve the service levels, and improve customer satisfaction. Fourth, to expand sales channels. Mainly through the traders channels and home appliance channel to sale products. As to the company, the selection of marketing channel mode must be in line with low-cost, simple operation, high efficiency principles. Too complex and too costly of the marketing channel mode, are not conducive to reduce costs. To change as the environment changes, to keep alive as the environment changes, and gradually built up the necessary scale marketing network.

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